Thorny Issues on Trail of Nazi Gold

In March 1996, a member of the staff of Sen. Alfonse D'Amato (R) of New York rang up the National Archives and asked an innocent question: How long would it take to go through US records dealing with Nazi-looted gold?

Archives officials thought the job would be easy, even though no one had been interested in those papers for 40 years. Two people could do it, they said, in two weeks.

Not quite. Today, two years after that initial inquiry, research into how much gold was stolen by the Nazis, where it went, and what it bought, has ballooned into one of the most wide-ranging and sensitive research projects ever undertaken by the US government. After examining 15 million pages created by 30 federal agencies, State Department historians have concluded that much of the Third Reich's stolen wealth went through Swiss banks, en route to buying vital war supplies in Sweden, Spain, Portugal, and Turkey.

Their discoveries have raised hard questions of responsibility for many nations, including the US. But those involved say closure, recompense, and forgiveness are their goals - not blame.

"I really view this as a cleansing process for all of us - the Axis, the neutrals, the Allies - about the worst events that occurred in this century, a century we are about to leave," said Undersecretary of State Stuart Eizenstat June 2.

Historians have long known the Hitler regime looted the treasuries of nations it conquered and used stolen gold for its own purposes. Indeed, the Allies warned neutral nations during the war that they were accepting tainted assets as payment - and that they would be called to account for such transactions after the inevitable German defeat.

After the war, the Allies set up a gold commission to recover the stolen wealth, including personal items of gold seized from Holocaust victims. But negotiations with neutral nations were, for the most part, difficult. Larger goals, such as the reconstitution of Western Europe, were at stake. A final accounting was never reached.

Then the issue exploded again in the late 1990s. Senator D'Amato, intrigued by documents uncovered by such groups as the World Jewish Congress, held hearings on the issue. Prodded into action, the State Department produced a first US report on the fate of Nazi gold in May 1997.

The report described in detail how Switzerland aided Hitler, converting stolen gold into hard currency through its national bank, and then stymied efforts to recover the gold after the war.

Since then, US diplomats have undertaken the tough task of encouraging the Swiss to come to account while defusing an anti-American backlash. Many Swiss feel the report ignored their vulnerable position, surrounded by German armies - and didn't mention the culpability of other nations that stood on the sidelines in World War II.

THE State Department issued a second report last month to give a broader picture of the issue. It concludes that about $300 million in looted Nazi gold, worth $2.6 billion today, was used to buy war materials. Three-quarters of the gold that paid for these supplies went through the Swiss National Bank. Neutral nations made a big contribution to the Nazis, the report says. But their actions should be judged in a larger context.

"The severe pressures under which the neutrals made their choices ... should remind us that even in this century's most stark armed confrontation with evil incarnate, there were no easy choices," concludes the study. Among these pressures were fear of invasion.

And the neutrals aided the Allies too. The Swiss let US spies operate in Bern. Portugal allowed the Allies access to crucial air facilities.

And the very concept of neutrality was more acceptable at the outset of the war, before its immense stakes became clear. On the whole, the Swiss behavior during the war "was in compliance with their national law, including the rules of neutrality," noted Harvard Prof. Detlev Vagts in a law review article.

Still, much of the neutrals' trade with the Nazis continued after their fears of invasion eased, concludes the State Department. And, with the exception of Sweden, most were reluctant to hand back the Nazi gold they had at the end of the war.

The Swiss and other neutrals "used very poor judgment and took advantage of circumstances," says Carl Boyd, a World War II scholar at Old Dominion University. "The trail was pretty obvious."